Figures from the national statistics office paint a pretty clear picture of
foreign ownership of the Czech corporate sector. And while the benefits in
terms of higher productivity are clear, the outflow of dividend payments is
also spelled out.

Photo: archive of Czech Government
Large parts of the Czech economy are clearly in foreign hands. Most of the
major banks are outposts of foreign financial institutions, most of the
major supermarket chains are foreign owned, and the biggest industrial
manufacturer, Škoda Auto, is a very successful part of the German-based
Volkswagen empire. The country’s two other major car makers are also
foreign owned.

According to figures from the Czech Statistical Office (ČSÚ) around a
third of Czechs are employed in foreign owned companies. When you take out
the public sector, that makes a considerable slice of private enterprise.

A hint of that is given by another figure from the office: that 42 percent
of value added in the economy, basically wealth creation, stems from the
foreign owned firms. That is just under twice the EU average for the
foreign owned contribution which comes in at 22.6%. But if Czechs think
that foreign predominance is excessive then there are other EU countries
where it is even higher. Foreign owned companies account for 57 percent of
wealth creation in Ireland; 45.5 percent in Romania, 42.9 percent in
Luxembourg, and 42.2 percent in Estonia.

Foreign owned companies for the most part did not pick up the worst assets
when they went on a buying spree in the early 1990s and those that started
up from scratch had the advantage of bringing in the latest technology and
know-how. But the difference in value added per worker between foreign and
Czech owned companies is nonetheless considerable. The former comes in at
936,000 crowns a year compared with 573,000 crowns for the latter, a
difference of just under a third.

The picture of foreign ownership across the board is not so surprising:
its fairly strong in investment and technology sectors where foreign
know-how can make an appreciable difference. It’s highest in information
and communications sectors, 64.6 percent, followed by industry where 57.6%
of output comes from foreign owned firms. In the water and waste sectors it
adds up to 40.8 percent. Smaller proportions are found in transport at 26
percent, construction 14.9 percent, and energy at 9 percent.

While foreign investment over the last 25 years has been considerable, the
other side of the coin is that most of the dividends from profits now flow
outside the country. In 2014 the total of dividend payments exiting the
Czech Republic is estimated at around 201 billion crowns.